in re Opinion of the Justices

• Citation: 98 N.E. 611,211 Mass. 624
• Parties: In re OPINION OF THE JUSTICES.
• Decision Date: 06 May 1912
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

211 Mass. 624

98 N.E. 611

In re OPINION OF THE JUSTICES.

Supreme Judicial Court of Massachusetts.

May 6, 1912

OPINION

The undersigned Justices of the Supreme Judicial Court have considered the questions submitted to them, a copy of which is hereto annexed, and answer as follows:

The questions relate to the constitutionality of a bill entitled 'An act to extend and define the duties of the Homestead Commission.' The general scheme embodied in the proposed bill is that the commonwealth shall purchase land, and develop, build upon, rent, manage, sell and re-purchase the same. The Homestead Commission is clothed with the fullest power to go into the business of buying, renting and selling real estate. As expressed in the bill, its purpose is to provide homes 'for mechanics, laborers, or other wage-earners,' or as suggested by the amendment set forth in the second question, to improve 'the public health by providing homes in the more thinly populated areas of the state for those who might otherwise live in the most congested areas of the state.' In a constitutional sense the difference between these two statements of purpose is not material in view of the actual provisions of the bill. The substance of it is that the commonwealth is to go into the business of furnishing homes for people who have money enough to pay rent and ultimately to become purchasers. It is not a plan for pauper relief. The question is whether this is a public use.

To this fundamental test must be brought all governmental activity in every system based upon reason rather than force. The dominating design of a statute requiring the use of public funds must be the promotion of public interests and not the furtherance of the advantage of individuals. However beneficial in a general or popular sense it may be that private interests should prosper and thus incidentally serve the public, the expenditure of public money to this end is not justified. Government aid to manufacturing enterprises the development of water powers and other natural resources by private persons or corporations with public funds, either through loans or by the more indirect method of exemption from taxation or taking of stock, have been universally condemned by courts throughout the country, although often attempted by legislation. The leading case is Lowell v Boston, 111 Mass. 454, 15 Am. Rep. 39, where a statute was considered authorizing the city of Boston to issue bonds for the raising of money to be lent to owners of real estate whose buildings had been destroyed in the devastation wrought by the Boston fire of 1872. This statement of the law by Mr Justice Wells, at page 461 of 111 Mass., 15 Am. Rep. 39 hardly can be surpassed for accuracy and clearness: 'The promotion of the interests of individuals, either in respect of property or business, although it may result incidentally in the advancement of the public welfare, is, in its essential character, a private and not a public object. However certain and great the resulting good to the general public, it does not, by reason of its comparative importance, cease to be incidental. The incidental advantage to the public or to the state, which results from the promotion of private interests, and the prosperity of private enterprises or business, does not justify their aid by the use of public money raised by taxation, or for which taxation may become necessary. It is the essential character of the direct object of the expenditure which must determine its validity, as justifying a tax, and not the magnitude of the interests to be affected, nor the degree to which the general advantage of the community and thus the public welfare may be ultimately benefited by their promotion.' This principle has been applied to a great variety of cases. It was amplified with a full citation of authorities in Opinion of the Justices, 204 Mass. 607, 91 N.E. 405, 27 L. R. A. (N. S.) 483.

The question, in its last analysis is one of taxation. Can the commonwealth raise money by taxation for the purposes set forth in the act?

Taxation is the ultimate question notwithstanding the provisions of section 3, which authorize the treasurer and receivergeneral to lend to the commission, from funds deposited in the treasury of the commonwealth by the savings banks under St 1908, c. 590, § 56. This statute requires payment to the treasurer of the commonwealth of all deposits in savings banks whose owners are unknown, which have remained untouched for thirty years. The constitutionality of this statute was upheld in Attorney General v. Provident Institution for Savings, 201 Mass. 23, 86 N.E. 912; s. c., 221 U.S. 660, 31 S.Ct. 661, 55 L.Ed. 899, on the express ground that the money is to be held and used by the commonwealth 'in recognition of the rights of the owner, and of the necessity of repaying it to him, with interest, when he establishes his lawful right thereto. The commonwealth, under the statute, becomes a kind of trustee for the owner.' These funds belong to a large number of persons. It may be that some never will be reclaimed, while undoubtedly some of them will be demanded. This bill does not contemplate a mere investment of funds in such form that they may be available for payment to the real owner when he appears. On the contrary its manifest purpose is a permanent investment not subject to repayment in any form for at least six years, and thereafter only by installments. It does not appear how large the savings bank deposit is, nor is that material. The commonwealth holds the entire fund as trustee and must be ready to pay it to the owners on demand. So far as the commonwealth by a permanent investment renders itself unable to make such repayment on demand, it must be ready to repay out of other funds. But these can be raised only by taxation. In any event, therefore, the question is one of taxation. It is too obvious for discussion that the proposed loan is not an investment on any theory of trusteeship, which courts are bound to administer. Dickinson, Appellant, 151 Mass. 184, 25 N.E. 99, 9 L. R. A. 279; Brigham v. Morgan, 185 Mass. 27, 69 N.E. 418. While these rules may not bind the Legislature in dealing with trust funds...